Once a stock-market darling, online delivery company Meituan has come under mounting regulatory and public scrutiny in China, souring investors on its growth prospects amid a broader crackdown on the country’s powerful technology sector.
On Tuesday, shares of Meituan tumbled nearly 10% before paring some losses to close at a seven-month low. The previous day, the shares had fallen 7%. The declines took Beijing-based Meituan’s market capitalization to the equivalent of about $195 billion. Three months ago, Meituan was flying high with a market capitalization exceeding $340 billion, according to FactSet, as Chinese consumers swarmed to its mobile app to purchase vegetables, groceries and household goods in bulk. In April the companyto fund new technology and ambitious expansion plans. Even after the recent tumble, Meituan is China’s third-most-valuable listed internet company, behind videogame developer and social-media company Tencent Holdings Ltd.
On Monday evening, the Shanghai Consumer Council, a quasi-government body that protects consumer rights, said it had summoned Meituan representatives to a meeting and told the company to address problems that had sparked a litany of complaints from consumers. Representatives of Pinduoduo Inc., a fast-growing e-commerce company that has become one of China’s top online shopping sites, were also called to a meeting by the council and told to rectify problems that included sales of counterfeit goods. Pinduoduo’s Nasdaq-listed shares plunged 9% in U.S. trading on Monday after the news.
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